NEW YORK – Broadcasters
were denied an injunction against signal aggregator Aereo for the second time
today when the U.S. Court of Appeals for the Second Circuit rejected their premise.
The broadcast plaintiffs in the case were appealing a previous decision from a
lower court also denying an injunction.
They were seeking to shut Aereo down while the courts decide on the larger
issue of copyright violation.

“The district court correctly concluded that Aereo’s system is not materially
distinguishable from the system upheld in Cartoon Network LP, LLLP v. CSC
Holdings,” the three-judge panel
wrote. “We therefore affirm the order of the district court.”

Cartoon v. CSC, or Cablevision, set the legal precedent for digitally recording
content for personal use. Aereo, which launched last year in New York City,
claims its service is essentially the same as Cablevision’s DVR-enabled
set-tops. Aereo retransmits local TV signals through an array of tiny,
individual antennas that it rents to subscribers for reception on mobile
devices.

WNET Thirteen, Fox TV Stations, WPIX, Univision, PBS and others are suing for
copyright violation based on retransmission consent law. Aereo says it’s not
subject to retransmission consent law because it’s a type of cloud-based DVR
service. Two of the three appeals court judges agreed. Judge Denny Chin
dissented.

“Aereo captures over-the-air broadcasts of television programs and retransmits
them to subscribers by streaming them over the Internet,” Chin wrote. “For a
monthly fee Aereo’s customers may ‘watch’ the programming ‘live,’ –that is with
a seven-second delay—on their computers and other electronic devices, or they
may ‘record’ the programs for later viewing. Aereo retransmits the programming
without the authorization of the copyright holders and without paying a fee.”

Whether Aereo is using one main antenna or many tiny ones makes no difference,
Judge Chin said.

“There is no technologically sound reason to use a multitude of tiny individual
antennas rather than one central antenna; indeed, the system is a Rube
Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of
the Copyright Act and to take advantage of a perceived loophole in the law,” he
wrote.

The National Association of Broadcasters noted Judge Chin’s dissent and said it
was “disappointed” with the decision.

“We agree with Judge Chin’s vigorous dissent and, along with our members, will
be evaluating the opinions and options going forward,” the NAB’s Dennis Wharton
said in a statement.

Aereo nonetheless had two judges—Christopher F. Droney and John Gleeson—in
their corner.

“We may be a small start-up, but we’ve always believed in standing up and
fighting for our consumers,” said Chet Kanojia, CEO of Aereo, which is backed
by Barry Diller, whose estimated net worth is $1.8 billion. “We are grateful
for the court’s thoughtful analysis and decision and we look forward to
continuing to build a successful business that puts consumers first.”

“Aereo has not won yet,” she said. “At the heart of the Aereo case is
the broadcasters’ claim that this technology violates the Copyright Act with
regard to retransmitting broadcast content. Based on other court cases—i.e.
FilmOn and Ivi—the broadcasters believe they will ultimately prevail and that
Aereo will be shut down.

“We believe the biggest issue here has to do with retransmission consent as
this service does not compensate broadcasters for their signal or network
content. We have heard that Aereo has not been discussed in any retransmission
consent negotiations, and we don’t see how traditional players can follow this
same business model given the current litigation.

“We don’t dismiss this case as it could have implications longer term, but we
are not surprised by today’s news, and we continue to believe that fundamentals
of retransmission consent are intact for the next several years—which is how
long this case could play out.”

~ Deborah D. McAdams

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Aereo's entire business model is based on using content provided by broadcasters. If they turned off those transmitters Aereo would have nothing to sell! Isn't that really the issue? This is different from the Cartoon Network case because Cablevision pays Cartoon Network to distribute their content, and the DVR is used by subscribers to time-shift viewing. It's amazing to me that these judges don't see that!
And we are supposed to believe that Aereo actually assigns a tiny antenna to each individual subscriber? That's truly ludicrous and does not change the premise anyway--they are reselling someone else's content which is provided for personal use.